Group Chap 19: ACA Flashcards
Introduction
- Patient Protection and Affordable Care Act (PPACA) enacted on March 23, 2010
- Series of 4 rulings by Supreme Court in 2012 upheld most provisions - Intended to improve access to health care coverage, defining the role of public programs, and improving the quality and efficiency of health care
- Initiatives vary in terms of effective dates, temporary vs. permanent status, and transitional allowances - Guidance from the following bodies
- Department of Health and Human Services (HHS)
- Center for Medicare and Medicaid Services (CMS)
- Center for Consumer Information and Insurance Oversight (CCIIO) - HHS release annual Notice and Benefit Payments and Parameters - specific implementation rules and figures
- State regualtory agencies and departments of insurance egulate health insurance
- National Association of Insurance Commissioners (NAIC) also involved in implementation of various provisions
Individual and Group Market Reforms
- Improving coverage
- Medical Loss Ratio
- Premium Rate Review
1. Improving Coverage
a. Expanded Dependent Coverqge - must cover dependents up to age 26
b. Limits on Recissions - insurers prohibited from rescinding coverage except in cases of fraud
c. Restrictions on Lifetime and Annual Limits - no Lifetime coverage limits, and plans can only have annual limits for non-essential health benefits (graded through 2014); grandfathered plans are exempt
d. Preventive Care Coverage - services for preventive care (rated A or B by Precentive Service Task Force) must be covered at 100% (no cost sharing); grandfathered plans are exempt
2. Medical Loss Ratio
a. Starting in 2010, Medical Loss Ratio must be reported
b. From 2011, plans must provide rebates to consumers if MLR is below:
- 85% for large groups
- 80% for individual or small group plans
- The ACA’s deafult definition for a small employer is one having 50 or fewer employees
- Four states (CA, CO, NY, VT) define small employers as having up to 100 employees
c. Beginning in 2014, MLR calculated based on past three years of premium and claims
- HHS identifies specific items to be included in the formula
3. Premium Rate Reviews
a. HHS secretary must establish process to review annual premium increaes
- Plans must justify “unreasonable” increases
b. States must report on trends in premium increases and recommend if plans should be excluded from exchanges based on unjustified premium increases
c. Grants are provided to states to establish medical reimbursement data centeres - to develop fee scheduels and provide consumer information
- From Aug 2010 - Sep 2014, $257 million was provided in gratns to states for the purpose of establishing effective rate review programs
Health Insurance Market Reforms
1. Health Insurance Market Reform Under ACA
a. No pre-existing condition exclusions - can’t limit or deny coverage based on health status
b. Rate variation limited to certain items
- Age - limited to 3:1 ratio from highest-rated band to the age 21 factor; children have a lower factor that used age 21
- Geography - factors determined by each health plan
- Plan Design and Network - “pricing actuarial value”
- Tobacco Use - limited to 1.5:1 for smokers vs. non-smokers
c. Guaranteed issue and renewability - must accept every employer and individual that applies for coverage (for individual and small group)
d. Waiting periods - can’t exceed 90 days
e. Essential Health Benefits - have to cover certain benefits (for individual and small group)
2. Essential Health Benefits
a. Starting Jan 1,2014 all small group and individual plans must offer EHBs
- Large group plans are not listed in regulation, as these plans usually already cover these areas
- Grandfathered plans are exempt
b. Essential Health Benefits under ACA
- Ambulatory patient services
- Emergency services
- Hospitalization
- Maternity and newborn care
- Mental health and substance use disorder services, including behavioral health treatment
- Prescription drugs
- Rehabilitative and habilitative services and devices
- Lab services
- Preventive and wellness services and chronic disease management
- Pediatric services, including dental and vision
c. Actual coverage details of these services vary by state
d. EHBs refer to the covered service set under each of these categories, including visit and unit limits over each of those services
e. ACA does not prohibit insurers from providing additional services or categories above and beyond what is required under each state’s EHBs
f. Beginning with benefit year 2020, CMS allows states more discretion in selecting EHBs
g. When changing EHBs, the state must provide federal regulators an actuarial certification that the new set of EHBs is not more generous than the most (actuarially) broad coverage provided under the state’s ten EHB choices under the former EHB guidance
h. Some states have additional mandated benefits
3. Grandfathered Plans
a. Can grandfather exisiting plans to keep current provisions unchanged
- However, must extend dependent care to age 26, limit receissions of coverage, eliminate lifetime limits, and eliminate pre-exisiting condition excludions on children
- Starting Jan 1, 2014, also had to eliminate annual limits, pre-existing conditions on adults and waiting period over 90 days
b. Plan can lose grandfather status if material plan design or coverage changes are made
c. In March 2014, government annoucned that non-grandfathered plans could continue through 2016 as “transitional plans”
- Many states allowed this, though some didn’t allow the way through the end of 2016
- Since then, the federal government has extended transitional plans an additional four times, allowing these plans to extend through 2020
- As of 2019, 32 states still allowed insurers to offer transitional plans
4. Qualified Health Plans and Exchanges
a. ACA created new marketplaces (exchanges) where individuals and small employers can purchase coverage
- Plan msut be deemded a “qualified health plan” (QHP) to participate
b. Each state required to create:
- American Health Benefit Exchange for Individuals
- Small Business Health Options Program (SHOP) for businesses with up to 50 employees (or 100 in the four states defining small groups as 100 or fewer employees)
c. In most states, SHOP Enchange enrollment was minimal
- Because consumer interest was generally low, the federal platform healthcare.gov, in use in many states, no longer enrolls small groups
- The website directs interested small groups to enroll using a broker or by contracting the health insurer
- Some states that operate their own exchanges continue to enroll small groups through their SHOP exchange
d. Types of Excahange Marketplaces under ACA
(1) State-based Marketpalce (12 states and District of Columbia)
- States run and administer all marketplace functions. Consumers enroll through state websites
(2) State-based marketplace on the federal platform (6 states)
- States perform all functions, but state relies on federally facilitated marketplace IT platform. Consumers enroll through healthcare.gov
(3) State-partnership Marketplace (6 states)
- States give in-person assistance and HHS performs all other functions. Consumers enroll through healthcare.gov
(4) Federally Facilitated Marketplace (26 states)
- HHS performs all marketplace functions. Consumers enroll through healthcare.gov
5. Cost-sharing Requirements
a. Plans sold in exchanges, and non-grandfathered plans in individual and small group market outside of exchanges, must cover EHBs, have OOP limits at or below Health Savings Account (HSA) limit and must fall into one of the metal levels
b. All copays included in cost sharing
c. HHS produces tools to determine actuarial value
d. Bronze plans that reduce cost sharing for at least one major non-preventive service or meet the requirement to be a high deductible health plan compatible with a health savings account have a broader AV range (65% instead of 62%)
e. Insurers may also offer a catastrophic plan - generally available to those under age 30
f. Grandfathered plans and large employer plans do not have to meet these standards
6. Single Risk Pool
a. Enrollees in non-grandfathered health plans offered by the insurer in the individual and small group markets (separately) treated within a single risk pool
b. Some states have chosen to merge the individual and small group markets into one single risk pool
7. Other Exchange Provisions
a. Insurers are subject to requirements regarding governance, reporting and consumer interfaces and must meet qualification requirements
b. CMS collects quality data and information on categories, and this data is displayed publicly to assist consumers in plan selection
c. Exchanges allows the offering of Consumer Operated and Oriented Plan (CO-OPs) - offered by nonprofit, member-run health insurance companies
d. Many CO-OPs were forced into run-off or liquidation due to financial difficulty caused by actions taken by congress, including
- Cessation of future CO-OP loan availability
- Restriction on access to outside capital, and
- Unpaid risk corridor program debts to CO-OPs
e. Prior to benefit year 2018, exchanges offered Multi-State Plans (MSPs), but the programs was discontinued due to low customer interest
8. Alternative Programs
a. States can create Basic Health Plan for Individuals between 133%-200% of FPL who would otherwise get premium subsidies
- States get 95% of the funds that would’ve been paid as federal premium tax credits and cost-sharing reductions
- Minnesota and New York are the only states offering Basic Health Program
Risk Mitigation for Insurers in the Exchange Marketplaces
- Reinsurance
- Risk Corridors
- Risk Adjustment
- 3 R’s of Risk Mitigation under the ACA
a. Reinsurance
- Transitional - from 2014 to 2016
- Reisnurance to provide reimbursement for costs of “high risk individuals” in the individual market
- Covers costs above a given threshold and below a maximum cap
- Funded by fees paid by health insurers and self-funded plans
- While the federal program’s last year was 2016, some states have implemented Section 1332 programs modeled on this federal program
b. Risk Corridors
- Transitional - from 2014 to 2016
- Compared actual plan costs to target costs
- Plan would either pay a portion to HHS if there is a gain or get a portion back from HHS if there was a loss
- Some insurer losses exceeded gains under the program, HHS collected far less in risk corridor payments than was owed to insurers
- Lawsuits were filed under unpaid risk corridor payments, resulting in federal government payments being made to affected insurers in 2020
c. Risk Adjustment
- Permanent - starting in 2014
- Charge health plans whose actuarial risk is below average and a payment given to plans whose risk is above average in the individual or small group market
- No states adminsiter their own risk adjustment
- Starting with 2020 benefit year, states also have the option to make limited changes to the risk transfer formular within the federal risk adjustment program
Premium and Cost-Sharing Assistance
1. Premium Subsidies for Individuals
a. Premium credits and subsidies became available for certain individuals and families with income below certain levels
b. Employees not eligible for premium credits if employer offer coverage (unless coverage is less than 60% actuarial value or if employee share of premium is greater than 9.5% of income)
c. Premium credits if income between 133%-400% of FPL
- Credits tied to second lowest cost silver plan in the area (on a sliding scale for income level)
- Cost-Sharing Reductions
a. Cost-sharing reduction variations (CSR) - plan design subsidies based on income, if income is below 250% FPL
b. Establish lower cost sharing amounts and limits
c. Targeted actuarial value of these plans are 94%, 87%, and 73% (+/- 1% corridor)
d. In October 2017, the federal government announced it would no longer make CSR subsidy payments to insurers
- In response, most states allowed insurers to increase premiums on silver plans sold in the individual ACA markets to make up for the lack of CSR payments, a practice called “silver loading” - Small Business Tax Credits
a. Employers with 25 or fewer employees and average annual wages less than $50,000 (in 2014 dollars)
b. Tax credit if purchasing coverage through SHOP
c. Employers must contribtue at least 50% of the total premium cost
d. Max credit is 50% of premiums paid for small business employers and 35% for small tax-exempt employers (employers with 10 or fewer employees and annual wages less than $25,000)
- Credit phases out as firm size and wages increase and is only available to eligible employers for two consecutive taxable years
Other Provisions
- Individual Mandate
- Emloyer Mandate
1. Individual Mandate
a. US citizens and legal residents must pay penalty if they don’t have coverage
- Phased in from 2014 to 2016
b. Penalty amount = greater of $695 or 2.5% of household income
c. Certain exemptions apply
d. In December 2017, the penalty was reduced to $0 beginning in calendar year 2019
e. In February 2018, 20 states sued the federal government to challenge the constitutionality of the ACA
f. At the time of this writing, a final decision has not been made
2. Employer Mandate
a. Penalties for employers not offering coverage
b. 50 or more full-time employees must offer coverage or pay $2,000 per full-time employee (excluding the first 30 employees)
c. Employers with less than 50 full-time-equivalent (FTE) employees are exempt
d. Employers with >200 full-time employees and who offer one or more plans are required to automatically enroll new employees
e. Penalty is indexed for increases in premium rates for calendar years after 2014
The ACA and Public Programs
Goal is to improve access to quality health care coverage
1. Medicaid Provisions
a. Expanded Medicaid to all non-Medicare eligible individuals with income up to 133% FPL
b. Federal government provides supplemental funding to states for this expansion of coverage
c. 2012 Supreme Court decision limits enforceability of this provision
d. Medicaid payments for primary care will increase to 100% of Medicare rates (increase is federally financed)
e. ACA supports new Medicaid programs such as Health HOmes for high risk enrollees, bundled payments, global capitation to safety net hospitals, ACOs, and payment for certain emergency mental and health services
f. Additional provisions
- Increase in federal match to CHIP
- Increase in drug rebates from manufacturers
- New programs for fraud and abuse screening
- Prohibition of federal payments for Medicaid services for hospital-acquired conditions
g. Created new federal coordinated health care office to improve coordination for dual-eligibles
2. Medicare Provisions
Amended Social Security Act to implement a wide range of quality and efficiency initiatives
a. Linking Payments to Quality Outcomes
- Value-based programs for hospitals, skilled nursing facilities, and home health agencies
- Improvements to the physician quality reporting system and physician feedback program
- Value-based payment modified under the physician fee schedule
- Payment adjustment for conditions acquired in hospital
b. National Strategy to Imrpvoe Health Care Quality
- Development of a a national strategy to improve the health system
- Creation of a working group to coordinate efforts of federal departments and agencies
- Creation of provisions related to quality measure development, quality measurement, data collection and public reporting
c. Encouraging the Development of New Patient Care Models
- Established the Center for Medicare and Medicaid Innovation (CMMI) to test, evaluate and expand different payment structures and methods to reduce Medicare, Medicaid and CHIP expenditures while maintaining or improving quality of care
- CMMMI established Medicare Shared Savings Program (MSSP) - Allows providers to organize ACOs and established independence at Home desmonstration project
d. Health Care Quality Improvements
- Availability of grants, including funding, requirements, eligibility and reporting
- Research activities and requirements
- Technical assistance and implementation issues
- Establishing community health teams to support patient-centered medical homes
- Medication management services in treatment of chronic disease
e. Medicare Advantage Payment and Design Changes
- Medicare Advantage (Part C) - “Blended benchmark” to determine payments to insurers
- Medicare Drug Coverage (Part D) - Phase down coverage gap (“donut hole”) from 100% to 25% from 2010 to 2020
f. Preention and Wellness Provisions in Medicare
- Eliminated cost sharing for preventive services
- From 2011 - 2015, 10% bonus payments to PCPs and surgeons in certain shortage areas
g. Ensuring Medicare Sustainability
- ACA initiatives to ensure Medicare Sustainability
(1) Incoporation of productivity improvements into market based updates
(2) Similar initiatives related to ambulance, ambulatory surgical centers, lab, and durable medical equipment
(3) Submission of data on quality measures by psychiatric hospitals
(4) Temporary adjustments to the calculation of Part B premiums
h. Other Medicare Provisions
- New demonstration programs, coordination of dual-eligibles and additional payments and protections for certain hospitals
- Reductions in DSH payments, a program that helps finance hospitals who serve a large share of uninsured low income patients
- Pharmaceutical manufacturers agreed to provide a 50% discount for brand name drugs falling in the Part D coverage gap - In Feb 2018, the pharmaceutical industry agreed to increase this discount to 70%
- New provisions to improve accuracy and refinement of Medicare payments in home health, hospice, skilled nursing and certain drugs and devices
Revenue Offset Provisions
- Health Insurer Tax
- Cadillac Tax
- Excise Tax on Medical Devices
- Other Tax related charges
- Health Insurer Tax
- New tax with total revenues collected starting at $8 billion in 2014 and increasing to $4.3 billlion by 2018
- 50% of net premiums taken into account in calculating the fee for nonprofit insurers
- There was amoratorium on the tax in 2017 and a suspension of the tax in 2019
- The tax was permanently repealed for calendar years beginning in 2021 - Excise Tax for High-cost Health Plans (“Cadillac Plans”)
- Effective Jan 1, 2018, employer sponsored plans with aggregate value over $10,200 ($27,500 for families) are subject to tax of 40% of the excess amount
- Tax is imposed on issuer of plan (employer)
- The tax was never collected, and permanently repealed in Dec 2019 - Excise Tax on Medical Devices
- Excise tax on certain medical devices such as stents, pacemakers, and defibrilators
- The tax went into effect in 2013, susepnded by Congress in 2016, and ultimately repealed in Dec 2019 - Other Tax-Related Changes
- Limits to tax deductibility of health care employee compensation, unreimbursed medical expenses and Blue Cross Blue Shield organizations
- Lower tax-facored allowances for flexible spending accounts (FSAs)
- New taxes on indoor tanning services and the pharmaceutical manufacturing sector
Other ACA Provisions
- Chronic Disease Prevention and Improving Public Health
a. Provisions focus on modernizing disease prevention and public health sustems, increasing access to preventive care, creating healthier communities and supporting innovation
b. The Secretary of HHS to evaluate federal health and wellness initiatives
- Assess their impact on health status including absenteeism, productivity, workplace injuries, and medical costs - Healthcare Workforce
a. Established National Health Care Workforce Commission to serve as national resource and a National Center for Health Care workforce Analysis
- To provide for information describing and analyzing the health care workforce and workforce related issues - Transparency and Program Integrity
a. Addresses transparency issues about physician ownership of hospitals, nursing home ownership and training, background checks on LTC workers and Medicare/Medicaid integrity initiatives
b. Elder Justice Act amended to help prevent elder fraud and abuse - Patient-Centered Outcomes Research Institute (PCORI)
a. Nonprofit institute to identify research priorities and conduct research comparing clinical effectiveness of medical treatments
b. PCORI is funded through the PCOR Trust Fund, which initially received income from three funding streams
- Appropriations from the general fund of the treasury
- Transfers from the CMS trust funds, and
- A fee assessed on private insurance and self-insured health plans - Section 1332 Innovation Waivers
a. States may apply for the following waivers to alter ACA requirements in the indiviudal and small group markets
- Individual and employer mandates
- EHBs
- Limits on cost sharing for covered benefits
- Metal tiers of coverage
- Standards for insurance marketplaces, including requirements to establish a website, a call center, and a navigator program
- Premium tax credits and cost-sharing reductions
b. States may request a “subsidy pass-through funding”: an aggregate payment of what residents would otherwise have received in premium tax credits and cost-sharing reductions
- Improving Access to Innovative Medical Therapies
a. Establishes required information for licensure of biological products to be considered as “biosimilar” or “inter changeable”
b. Expands entities getting discounted prices to provide more affordable medicine for children and underserved communities
Non-ACA Plans
- Associaton of Health plans (AHPs)
a. AHPs allow professional and trade associations to offer health coverage to their members
b. Associations can obtain better terms for their members than small employers because of their larger pools of individuals
c. 12 states filed a lawsuit challenging the final rule, and as of late 2020, the case had not been decided - Short-Term Health Plans
a. Have shorter coverage periods than conventional health insurance and do not need to comply with the ACA’s rating rules and EHBs requirements
b. Sold at much lower cost and most people purchasing these plans are younger and healthier than those purchasing in the ACA marketplaces
Resources
- Resources for practicing actuaries doing work under ACA
- Final rules released by HHS
- HHS Notice of Benefits and Payment Parameters
- State rules (via website or state deprtment of Insurance)
- Regulatory guifancee from CCIIO
- Applicable ASOPs and Academy Practice Notes
- Industry and professional research reports
